Nathan Biggs (@nathanbiggs), CEO

This blog post is the latest in a series of articles that House of Brick is providing, which use quotes and information from recently filed lawsuits against Oracle to uncover the truth about their treatment (or perhaps better stated, mistreatment) of their customers. This article focuses on running Oracle in the cloud (AWS, Azure, or VMware Cloud, etc.) and the myths that people may be hearing.

As with any myth, its potency is enhanced when some elements of truth are mingled in with the misleading parts. Here are some of the most common myths that we hear when talking to our clients, or others in the industry, about running Oracle in the cloud. We will explore the elements of truth in each, but also point out how they are misleading overall:

The myths:

1. The Oracle license agreement is confusing and intentionally vague when it comes to the cloud
2. It costs twice as much to run Oracle in AWS than it does in the Oracle cloud
3. Licensing applications in the cloud is a complex process
4. People should be afraid of audits if they run in AWS or Azure
5. The Oracle Cloud is the best cloud solution for running Oracle software

1 – The Oracle license agreement is confusing and intentionally vague when it comes to the cloud

Elements of Truth: When it comes to bringing your own database or middleware licenses to the cloud, your contractual license agreement is of little help. This is because your license agreement is based on the physical processor cores on which the Oracle software runs. Counting physical cores is an impossible task in a multi-tenant cloud environment, such as those provided by AWS or Azure. As a result, some people might be intimidated that they do not have contractually binding cloud provisions to rely on.

Why is this a Myth? Oracle publishes a policy document called Licensing Oracle Software in the Cloud Computing Environment (the Cloud Policy). While non-contractual, this policy explicitly extends your contractual rights and allows you to count virtual CPUs in AWS EC2 and RDS, and in Microsoft Azure. In 2017, Pam Fulmer, an attorney at Tactical Law Group, and I published an article in the Northern California Oracle Users Group Journal about licensing Oracle in the Cloud. In in the following quote from that article, she describes how customers should think about the Cloud Policy (emphasis added):

“Reliance on such documents may be risky, however, as Oracle expressly points out in the Licensing Oracle Software in the Cloud Computing Environment policy that it is non-binding and subject to change at any time. However, to the extent that Oracle is knowingly publishing extra-contractual documents on which its customers rely by making large investments, an argument can be made that Oracle should be estopped or prevented from changing course down the road, especially if such a change would cause injury to Oracle customers. Whether a court would accept this argument, or find that the customer proceeded at their own risk, is an open question.”

In House of Brick’s vast experience helping customers through Oracle audits, we have now had opportunities to defend clients who deployed their Oracle workloads in AWS or Azure, and who used the Cloud Policy to license by vCPU. We found that the Oracle LMS team respected those deployments according to the terms of the Cloud Policy.

We recommend that our clients review all of the contracts and policies from Oracle with their legal team when developing a cloud strategy. We can also help provide guidance in this area.

Where the Misunderstanding May Come From: The misunderstanding on the confusing and vague nature of Oracle contracts may come from Oracle itself. As noted in the Consolidated Class Action Complaint filed against Oracle executives, it is alleged that the Oracle sales teams routinely confused customers by bundling cloud and non-cloud contracts into a sale, even without the customers’ knowledge of such bundling. Here are quotes from two former Oracle employees regarding this alleged practice:

[Former Employee 7] stated that Oracles (sic) was “effectively hiding from customers the cloud portion [of the contract] because customers, in the beginning, didn’t want to hear about cloud.” [Former Employee 7] reported that “in many cases,” cloud subscriptions would be added to a customer’s contract even though Oracle had never discussed that description with them. “Sometimes they would only find out when someone asked them to renew, or if automated email systems sent out information about their cloud credits.” [Former Employee 6] corroborated that customers often did not know cloud products were inserted in a deal or how to use those cloud products. [Former Employee 6] stated that [Former Employee] he heard from many sales representatives that Oracle “would bundle things together and push cloud subscriptions right through” and that customers did not “underst[and] what they were getting in terms of cloud.”

2 – It costs twice as much to run Oracle in AWS than it does in the Oracle cloud

Elements of Truth: On January 23, 2017, Oracle modified their Cloud Policy document, to remove the use of the Processor Core Factor Table in calculating licenses required in AWS and Azure deployments. This change effectively doubled the number of licenses required in the cloud. As Dave Welch, House of Brick’s CTO and Chief Evangelist pointed out in a blog post at the time, “Oracle just gave itself a 100% raise on non-SE licensing in Oracle-authorized cloud environments.” I thought that it was ironic that later that year, Larry Ellison bragged “We’ll beat Amazon cloud pricing by half”. Of course, you could beat it by half if you first doubled the price of running your software in Amazon!

Why is this a Myth? If you simply pick up and move your on-premises workloads into the AWS or Azure clouds (lift and shift), and apply the Cloud Policy, then it is likely going to require about twice as many licenses as currently in use. But why would you do a lift-and-shift into the cloud? When properly developed, an effective cloud strategy will minimize the licenses that you need. I discussed this in a presentation at AWS re:Invent 2018. Here are some things to consider to minimize the license impact as you move into the cloud:

• Consider VMware Cloud on AWS or Amazon EC2 Dedicated Hosts to apply core-based licenses rather than using the Cloud Policy
• Consider reducing cores or vCPUs in Azure and AWS to just what the workload needs, rather than using dramatic over-subscriptions
• Consider cloud alternatives to expensive Oracle products for HA and DR
• Consider Standard Edition instead of Enterprise Edition Database, and evaluate whether the License Included model (Standard Edition) from AWS would save license costs
• Consider alternatives to Oracle database, such as Microsoft SQL Server, or get help from our friends at AWS Database Freedom

3 – Licensing applications in the cloud is a complex process

Why is this a Myth? Licensing Oracle applications (EBS, Peoplesoft, JD Edwards, etc.) is typically different from the core-based licensing of Oracle database and middleware. Take a look at your application licensing metrics, and you are likely to find that they have no dependency on the underlying infrastructure at all. This means that you can probably run your applications on-premises, in the cloud; you can run them here or there, you can run them anywhere ^[1]. The main thing to be careful of when moving applications into the cloud is the licensing for the underlying database and middleware, which we discussed earlier.

4 – People should be afraid of audits if they run in AWS or Azure

Why is this a Myth? I discussed how Oracle is using audits, and threats of audits, to drive their cloud revenue in some detail in my previous article. Avoiding an audit from Oracle is not necessarily a good thing. If you have not been audited in the last three years or so, there is a chance you may be paying Oracle too much money, and they are leaving you alone. I quoted a very insightful comment from a former Oracle employee (FE 6) in that post:

FE 6 stated that it was a “regular practice” for sales representatives to contact LMS to start an audit when the customer was not going to buy cloud product, and tell LMS “[t]hey’re not going to buy anything from me so let’s just audit them.” LMS would find a compliance violation, and the representative would start negotiating from there. FE 6 confirmed that these “extortive” tactics were a “common practice.”

House of Brick helps our clients to develop cloud migration strategies that take Oracle licensing fully into account. This includes evaluating audit risks, and developing audit preparedness. There is no need to be intimidated into not doing the right thing simply out of fear of an audit.

5 – The Oracle Cloud is the best solution for running Oracle software

Elements of Truth: Oracle has definitely been making some strides in the cloud, especially with their new Cloud Gen 2 offerings. This includes cloud-only products such as Oracle’s Autonomous Database.

Why is this a Myth? There is more to selecting a trusted cloud provider than picking one or two bullet points as a basis for a decision. Trust comes from experience and proven success. The industry’s cloud leaders are clear, and backed up by Gartner’s analysis:

The two authorized cloud providers in Oracle’s Cloud Policy are Amazon AWS and Microsoft Azure. They are also Gartner’s clear leaders in the Infrastructure as a Service (IaaS) cloud^[2]. The Oracle cloud is not only in Gartner’s “Niche Players” quadrant, but they were moved farther down in 2018 from 2017. Oracle scores higher in Gartner’s magic quadrant for Operational Database Management Systems, but that is not a cloud assessment as much as it is an assessment of the excellent nature of Oracle’s database technology. We are absolutely fans of Oracle’s software technology offerings, but feel that our customers are better served running that software in AWS (including VMware Cloud on AWS) or in Azure than in Oracle’s cloud.

Let us know if you want to talk about your cloud strategy. We can help you develop and implement a plan that is fully license-compliant, while taking advantage of all of the benefits that today’s modern clouds offer.

[1] Dr. Seuss: https://en.wikipedia.org/wiki/Green_Eggs_and_Ham
[2] Gartner: Magic Quadrant for Cloud Infrastructure as a Service, Worldwide